REPE/Development associate salary
Hi all,
I've been lurking for a while on WSO and finally sacked up to post. I work for a mom and pop hotel developer/owner/operator in SoCal. Actual title is R/E associate, but my scope of work includes sourcing deals (either reno or new build), underwriting deals, lining up consultants (architects, GC, surveyors, etc.), interfacing with city, securing entitlements, developing pitch books for investors, due diligence, market research, and anything else related to real estate. VP of construction also gives me tasks including build permits, bonding work, etc.
I started 6 months ago and came from a commercial appraisal background at a boutique firm that did quality work for wells, JPM, pension funds, etc. I've produced $22 million in deals so far. I'm on track to underwrite another 13 million over the next couple months. Total value on the complete projects will total at least $100 million (very conservatively).
I've had to learn the hotel business overnight and my question is regarding my compensation. My counterparts at other similar firms are VP of Real Estate. What should my compensation structure look like? I thought I'd be in a supporting role, but in reality, I'm the main driver on the business development side. I feel like I'm grossly underpaid. I make 45K with a 10k bonus per deal.
Thank you in advance. This forum has been extremely valuable and I hope to be able to contribute as well.
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I'm closing my first two within the next week. I'm projecting 3-4 in 2016. Principle is extremely bullish on new build deals, but lacks sophistication in several departments. I've had to learn modeling, hotel construction costs, brands, and numerous other facets of business. There is literally no infrastructure in RE dept and I've had to build our models while facilitating 1031 exchanges that were initiated prior to my being hired. The analysis and DD work is easy, but sourcing deals in the current climate has been difficult. The exposure is amazing, but there's really no guidance. I doubt that the pool of applicants that I was measured against would have been able to implement the infrastructure that I've put in place. That being said, the culture is great. The company is very values driven and I appreciate the opportunity, but I have to learn everything independently.
Welcome to real estate! The lack of training in our industry is well known.
Associate level salaries I see range from $85-125k with varying bonuses of 20-40%. You're underpaid for sure. You don't have to retire there though.
You are definitely underpaid for the work you have described. RE is weird as the pay range for certain positions can vary wildly. You should have a really good idea of what kind of income you are generating for your firm (fees and the like). At your yearly review I would mention that as support for increasing your pay. Wouldn't hurt to pull a few comparable positions salary numbers as well. If it's a small shop like you described you should have better luck arguing your case vs a huge firm with HR holding the keys.
I'll start off by saying I think you are severely underpaid. What is your salary as a function of cash thrown off from the firm's holdings? How much income are you generating for the firm? At smaller shops it is way easier to figure out what you're worth. If you are driving the business, you are worth a lot more than 45k + 10k per deal you source.
Our roles seem similar...however, i'm in NYC. I'm at 150 + bonus + ~5% carry in each deal I source. I'm also going on 4 years out of school, not too sure on your experience. Infrastructure and sophistication at my shop is there. Boutique firm, but definitely not mom and pop. Try asking to stick your 10k 'finder's fee' into the deals. It will be tough to ramp up salary at a mom and pop shop assuming they don't have a giant majority owned portfolio throwing off cash to pay your salary. Remember, we are in a real asset business. ROC is limited.
Personally, I choose the learning experience over the $ every time... it will pay off in the long run. I would suggest soaking up as much experience as you can for a few years, then heading to a firm that can pay you what you're worth.
Wow. Thanks for taking the time to help me out. It's good to know that I have some sort of leverage. I run with the same mentality where I value the experience and learning over the cash, but I resent the fact that I'm making so much less than everyone else at the corporate offices. No one else has any technical skills except for the VP of construction and the project manager. The company actually does have a majority owned portfolio and I work directly with the head honcho.
I feel like I would be more inclined not to care about salary if there was more of a learning opportunity, but I find myself literally doing everything... The hours have been insane because I have to teach myself everything....
If you're truly sourcing, working though, and closing deals 'on your own' you're way underpaid. I'd understand a low salary and high amount of carry/bonus, but not both. Emphasis on the 'on your own'.
I can't tell entirely if you're in support role to the Dealmaker or your the Dealmaker yourself. If you're in more of a support role I don't think you're THAT far off depending on your company's deal volume. If you clear anywhere near 100K in a support role you're doing quite well, especially relative to other corporate positions.
EDIT: I just read the last paragraph of the OP. If you're new to the business you're going to have to cut your teeth for a few years at a 'low' salary while you build your track record. You can then leverage your track record to work for a higher-paying firm or to develop on your own.
capratecompression at 4 years out of school you're doing exceptionally well - nice job.
Ultimately my boss is the dealmaker as he approves the acquisition price, but I'm responsible for sourcing the deals, underwriting, due diligence. In the first two deals I've done so far, I've done literally everything except for sign on the dotted line..
Is he sourcing deals/capital/relationships and driving value on the business development side? Is he mentoring/teaching you? If so, I get it. You're the worker bee. That's the way it works at the ground level. You need to build a track record. Then you leverage your track record into higher pay or developing on your own.
If he contributes nothing but price approval you have a shitty boss.
I would say you are severely underpaid based on the comments you have made so far. I work at a REPE shop in Seattle and I am 3 years out of college. I am looking at $150k - $200k all in with the ability to invest within our RE funds and our interest gets promoted based on the back-end incentive fees. But it seems as if you are getting a great experience in terms of learning the hotel business from this job. I see you having two options.
1) Stay at your current firm and continue to grind it out sourcing and closing deals. Soon enough and it seems as if it is already happened you will be a vital part of the firm. You can try and turn that 10k per deal bonus into a % carry of the GP equity. I am assuming as a developer / operator the firm is putting in GP equity on each deal. That way your work can be promoted via the waterfall.
2) Stay at your current firm for another 6 months to 1 year and then switch over to a larger firm where your experience and work will be valued more.
Keep in mind you are definitely on the high end for 3 years out of school IMO (Nice Job). Comp can obviously vary dramatically in CRE however Hoteldev you are definitely on the low low end. At the beginning of your career good experience trumps all though..
Thanks for the feedback. I love the opportunity to do what I'm doing. It just sucks that I have to learn everything on my own.. Furthermore, I'm increasingly noticing that there is a lot of calculated misinformation from many of the other employees. Factors that affect my models include finance costs, build costs, etc.. When I ask for company data on these items I get hit with a brick wall. If I just wanted to source deals I would go work for a brokerage, but I'm taking the time to learn all the modeling and it would be nice if everyone here didn't seem so threatened. It's also disheartening to learn that I make less than HR, marketing, accounting...
At the end of the day, I really can't complain as it has allowed me to break into the industry so I'll just tough it out for now...
Calculated misinformation? Wtf? That sounds like a serious culture issue. There shouldn't be any reason for that even in a hyper competitive office situation, especially since you're not commission based. Do the leadership understand or care that this type of thing is happening? It doesn't sound like it's in the best interest of the firm.
you only started 6 months ago? Right now you probably still don't know what you don't know....keep learning and working hard and the rest will take care of itself. I wouldn't start questioning the comp until at least 1.5 years out. The experience is all that matters....the extra pay today will be insignificant in the future.
You are new, which explains the low salary. If you can keep getting results you'll be in a good position to negotiate.
What salary would you expect to make as a land development & acquisition analyst? (Originally Posted: 01/22/2014)
As mentioned, what salary would you expect to make in a non-nyc/cali land development & acquisition analyst role? The company buys land and builds single family homes. Are these roles typically low base, then a bonus of X%?
I interviewed for this role with Toll Brothers a while back. I didn't get passed the first interview, but my assumption based on my level of experience was something like $55,000 base with 20% bonus potential. That's not hard and fast or anything, just kind of me piecing together things.
God, it really depends on so many factors you didn't give. My guess would be 50K (give or take 5K) + 10% bonus but this is a huge guess with a lot of assumptions on my part.
build single family homes? id expect a 3-4% return on each deal...unless the company has mass scale, returns for that fund / equity wouldnt be that high. Id expect a 50 - 55k base for a company with that type of strategy in NYC. discount further for other states.
Not sure how the return comment has anything to do with anything but I'm sure you meant well. I can give you multifamily dev & acq analyst number which should be somewhat in the ballpark. First Year analyst typically out of a RE masters course or a year experience - $45-55k and 10k Bonus
these numbers are grossly low (not saying they aren't true, just low)
I'm from a family of home builders. Home building is a profitable undertaking, but it suffers from razor thin margins due to intense competition. You can't afford to pay 20 something analysts $200k.
$45,,000 - $55,000 plus bonus
Makes sense. Cant blame kids for wanting to go into IB making triple these amounts
Lol well its not like the decision is a "this or that." No one who could get an IB analyst position is considering the above mentioned position.
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@Loki777 I'm currently interviewing with a firm in the Southeast that buys single family homes, renovates them, then manages the property. They occasionally will buy up lots and build as well.
The role I interviewed for is doing market research, valuation and ultimately underwriting the deals. First year base was $40k-$45k with a top end bonus of 50% base (I got the feeling that bonuses varied widely so I'd expect 20%-40%). While the base is a little low, all-in comp for this market is decent. As you move up the ladder your base increases significantly while your bonus range shrinks. Hope this helps.
Good info. Definitely different than a large home builder. You're interviewing probably with a small firm, right?
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